A tractor with a ‘No farmers, no food’ placard drives through London (Image: Getty)
Farmers are facing a “perfect storm” of challenges following Labour’s inheritance tax raid, MPs and campaigners have warned.
Rocketing energy costs, record wet weather, Rachel Reeves’s inheritance tax announcements and subsidy changes all risk decimating the sector.
Helen Morgan, Liberal Democrat MP for North Shropshire, said: “Farmers are facing a perfect storm of challenges: skyrocketing energy costs, trade deals that undercut British producers, record wet weather, and a botched transition from the Basic Payment Scheme.
“Next year, direct payments will be slashed by 76%, leaving farmers without the vital support they need to stay afloat. Our farmers deserve better. “
The Chancellor announced reforms to inheritance tax relief at last month’s budget which mean farmers will have to pay a 20% rate on land and property they inherit worth more than £1 million.
The Daily Express’s Save Britain’s Family Farms crusade has demanded a U-turn on this.
Martin Lines, CEO of the Nature Friendly Farming Network, said: “Labour’s policy has created a catch-22 for farmers: they are now caught between investing in long-term sustainability or holding back on improvements to avoid triggering future tax liabilities.
“In a sector that thrives on long-term planning, this kind of uncertainty could stall progress on the very climate and nature restoration goals that are vital for the future of farming and food security.”
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Around 13,000 farmers descended on London last week to protest against the Government’s changes at the Budget.
They warned it risks harming food security and could destroy the sector for future generations.
Mo Metcalf-Fisher, external affairs director at the Countryside Alliance, said: “Farmers put food on our tables and as countryside custodians, remain proudly responsible for maintaining and enhancing the countryside we all know and love.
“The Treasury would benefit from engaging with industry experts, rather than simply relying on Whitehall policy graduates. Going forward, it’s clear the Government need to start thinking about how they can do things for the countryside, rather just than to it. It is a home and place of work for millions of people. It’s success it’s the country’s success and it must never just be an afterthought in the policy making process.”
Rain Newton-Smith, chief executive of the Confederation of British Industry, today criticised the changes to inheritance tax relief for farmers, saying it had left them “fearful” about the future.
David Sturrock, senior research economist at the Institute for Fiscal Studies, said: “The exact design of the tax change is important, and there are two mitigations which the government could consider.
“There is a good case for making unused portions of the new £1 million allowance inheritable by a spouse or civil partner, as happens for the main inheritance tax allowances. In addition, current farm owners passing away in the next seven years (but after the new regime comes into force in April 2026) will not have had the opportunity to avoid inheritance tax by making lifetime gifts. If the government wished to give current farm owners the same opportunity to avoid inheritance tax as owners of other assets, it could, for example, make lifetime gifts of agricultural property made before a certain future date inheritance tax free, regardless of the timing of the death.”
Environment Secretary Steve Reed last week said he heard the “anguish” of the countryside after the protests against the Budget.
He said he wanted to support farmers while announcing a 25-year farming road map to help the sector move to more environmentally and financially sustainable models of agriculture.